Nassos Stylianou is an Online Writer at City A.M. He can be contacted at nassos.stylianou@cityam.com. He is particularly passionate about: sport, European politics and startups

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Banco Espirito Santo has spooked investors (Source: Getty)

European stocks are regaining their nerve this morning, as the troubles plaguing Portuguese lender Banco Espirito Santo yesterday reverberated across the Eurozone and beyond.

Fears over contagion from the crisis at Portugal's troubled lender sent even US markets tumbling yesterday, as the Dow Jones Industrial Averaged had opened 150 points lower, close to 0.9 per cent.

Investors appear to have lost faith in the lender, the country's largest listed bank by assets, fearing its assets are overvalued. After it emerged yesterday that its parent group, Espirito Santo International SA, has missed a debt repayment, trading in its shares was suspended.

Stocks seemed to be on the rebound early on this morning, stabilising after yesterday's steep falls. Portugal's PSI share index edged up 0.5 per cent in early days after plummeting 4.2 per cent to a nine-month low on Thursday.

The pan-European FTSEurofirst 300 was up 0.4 per cent, the French Cac 40 rose 0.6 per cent early on, while the German Dax was 0.3 per cent higher in early trading.

Portugal's central bank and government ministers have maintained that Banco Espírito Santo is in no danger of contagion from the difficulties affecting the Espírito Santo family group, the lender's biggest shareholder.

This morning, the Bank of Portugal reiterated that BES will be able to fulfil capital requirements.

"The question on investors' minds is whether this latest Portugal banking crisis will lead to contagion in the region. The market doesn't quite feel this is the case," market strategist at IG Stan Shamu told Reuters.